LTC Bullet: The Medicaid Prevention Business

Friday, February 23, 2018


LTC Comment: What went wrong with LTC insurance and what should happen next? Ron Hagelman opines after the ***news.***

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LTC Comment: Ron Hagelman’s column in the current issue of Broker World caught our eye. He argues the time has come to acknowledge how LTC insurance failed and to refocus its mission. Or put another way, he suggests we look beyond the product’s remarkable success, insuring eight million Americans, to contemplate how it might protect another 50 million! The secret to achieving that goal, he argues, is to pursue a more modest objective. Focus on helping people avoid the Medicaid trap, i.e. the risk of ending up by default on the underfunded welfare program that dominates long-term care financing in the USA.

Reprinted below with permission is Ron’s column. If you aren’t already a Broker World subscriber, become one now and read Hagelman’s “Last Word on LTCI” every month. I do.


“The Last Word On LTCI...Process of Elimination”
Ronald R. Hagelman, Jr.
February 2018

The entire long term care/chronic illness industry must face the reality of our unsuccessful attempt to soften the economic and emotional blow of an extended need for care and to finally accept that many of our overly optimistic rationalizations about future outcomes may have been structurally flawed at inception. We must publicly and politically recognize the inevitable and potentially expensive nature of the risk for most Americans. The truth is we can now measure our failure. We currently have about 8 million brilliant consumers who bought policies, will keep their policies, and will maintain the freedom of choice and dignity of control of their own claims. Unfortunately the most recent numbers I’ve seen suggest that over the last 20 years we have left over 50 million behind. Those who could have and should have done something. Blame for the failure is irrelevant. Mistakes in pricing assumptions are hopefully, for the most part, just history. We now live in a world of closed blocks of premium continuing to fester from the weight of our own false assumptions. We have certainly learned that more of the same is hubris on steroids.

Frankly what is required is a little humility. Most claims are financially manageable and some extra “supplemental” insurance assistance can make a world of difference to a much wider audience. The goal for the affluent needs to remain that the best way to replace the risk with insurance. But the underlying need to maintain private pay status must become the industry’s new “Battle Cry!” Current claims analysis is definitive: 90+ percent are over in three years, 83 percent of all past claims reviewed would have been covered by $100,000. Stop asking, “How much insurance is enough?” The question is, “How little is needed to keep you free of government dependence?” Medicaid care is not necessarily bad, it’s just inferior. It is discounted care by definition. I apologize for repeating myself but the fact is that last year alone it was $7 billion short of the actual cost. Please do not misunderstand: God Bless Lyndon Johnson my fellow Texan. This country desperately needed a social safety net for those most in need of care. However, after a 20 year friendship with Stephen Moses, I am morally required to humbly suggest that: If those who could and should afford their own care did not artificially impoverish themselves and steal from those truly in need, the quality of governmental warehoused care would improve. I am happy to proclaim from the highest mountain top that “I am in the Medicaid prevention business and that I am ready, willing and able to make sure that never happens to those I care about.”

Our futures in long term care planning need to move to opposite corners of the decision making processes. We must openly recognize our failures. We can increase our sales success by refocusing our goals. More middle class Americans must understand that a little goes a long way to maintaining basic human freedom of choice. We must acknowledge all the dollars that can come into play at the point of claim and make absolutely sure we have added sufficient supplemental protection to keep those we care about in complete control of their own claim destiny. And we must acknowledge that the 90 percent we left behind still need our help at “The Point of Care” when it hits the fan, and then be prepared to do all in our power to leverage every available source of funding. Medicaid is wrong for those we love and it does take so little additional protection to guarantee personal control and freedom of choice. Eliminate absolutes, take no prisoners when placing some level of supplemental help, and do not forget all those we missed the first pass through the orchard.

Other than that I have no opinion on the subject.

Ronald R. Hagelman Jr., CLTC, CSA, LTCP, CLTC, CSA, LTCP, has been a teacher, cattle rancher, agent, brokerage general agent, corporate consultant and home office executive. As a consultant he has created numerous individual and group insurance products. A nationally recognized motivational speaker, Hagelman has served on the LIMRA, Society of Actuaries, and ILTCI committees. He is past president of the American Association for Long Term Care Insurance and continues to work with LTCI company advisory boards. He remains a contributing "friend" of the SOA LTCI Section Council and the SOA Future of LTCI committee. Hagelman is president of Broadtower Insurance Solutions, a national IMO helping BGAs enhance LTCI production. Hagelman can be reached at Broadtower Insurance Solutions, Inc., 156 N. Solms Rd., New Braunfels, TX 78132. Telephone: 830-620-4066. Email: Website: